Student Loan Debt

Wednesday, September 7, 2011

FedEx and Pepsi Are Top Defense Contractors? 5 Corporate Brands Making a Killing on America’s Wars

Learn which "civilian" companies are making big bucks on today's wars.

Chances are, if you’ve ever sent a package overnight, bought a PC or a can of soda, you’ve paid your hard-earned money to a major Pentagon contractor. While large defense corporations that make fighter jets and armored vehicles garner the most attention, tens of thousands of “civilian” companies, from multi-national corporations hawking toothpaste and shampoo to
big oil behemoths and even local restaurants scattered across the United States, all supply the Pentagon with the necessities used to carry on day-to-day operations and wage America’s wars. And they’ve made a killing doing it since 9/11.

In 2001, the massive arms dealers Lockheed Martin, Boeing and Northrop Grumman ranked one, two and five among Department of Defense contractors, raking in $14.7 billion, $13.3 billion and $5.2 billion, respectively, in contracts. Last year, Lockheed’s contract dollars were almost double their pre-9/11 level, clocking in at $28 billion, while Boeing’s had jumped to almost $19 billion and Northrop Grumman, still in the five spot, had more than doubled its 2001 take, with $12.8 billion in contracts.

America’s recent wars have obviously been good to these companies. On September 10, 2001, Lockheed’s share price was $38.32. Today, it tops $70 per share. In 2001, the company’s net sales reached $24 billion. Last year, they were almost $46 billion. Likewise, Northrop Grumman’s net income has more than quadrupled in the last decade, according to the investment analysis website, Seeking Alpha. Still, these corporations are just a fraction of the story when it

comes to the massive sums of money made by the military contractors since September 11, 2001.

Chris Hellman of the National Priorities Project, writing recently at TomDispatch.com, noted that since the 9/11 attacks, the United States has spent about $8 trillion on national security. Even accounting for all the funds paid out for troop salaries, overseas base construction and the training and equipping indigenous allies in Iraq and Afghanistan, among many other costs, it’s clear that vast sums of Pentagon money are flowing somewhere other than to the top weapons-makers. Unknown to most U.S. taxpayers and even many Pentagon-watchers, some of the largest and most recognizable corporations in the world have also been getting rich on America’s wars. Below are five examples of “civilian” companies that have reaped major rewards from the Pentagon during its last decade at war:

1. BP: The oil giant, perhaps most famous for dumping 206 million gallons of crude into the Gulf of Mexico last year, is also a perennial power when it comes to Pentagon contracts. Back in 2001, BP nabbed a cool $357 million in contracts from the Department of Defense. Last year, the number hit $1 billion and it’s no secret why. As defense-tech writer Noah Shachtman noted at Foreign Policy last year, the U.S. military burns “22 gallons of diesel [fuel] per soldier per day in Afghanistan, at a cost of more than $100,000 a person annually.”

2. FedEx: The overnight shipping giant is a long-time defense-contracting powerhouse that has also seen an exponential increase in contract dollars since September 10, 2001, when its stock was trading at just under $40 per share. By the end of that year, FedEx had been awarded about $211 million in contracts from the Pentagon. In 2010, the company received $1.4 billion from the Department of Defense and this year, with its stock closing in on $80 per share, has already passed the $1 billion mark, again. This includes a $182 million deal, inked in August, to pack and ship fresh fruit and vegetables to U.S. military bases overseas and a joint agreement, which also includes United Parcel Service (UPS) and Polar Air Cargo, which could last up to five years and potentially net the companies a combined $853 million.

3. Dell: If you’re in the military and you want to pilot a drone, transfer supplies or write a memo, you need a computer. That’s just what Dell provides. The desktop- and laptop-maker has been plying the Pentagon with computers for many years and, just like Lockheed, Boeing and Northrop Grumman, has done especially well by the Department of Defense since 2001. That year, Dell was awarded $65 million in Pentagon contracts. By 2009, that number had jumped to $731 million and, over the course of the decade, has added up to a total of $4.3 billion in contracts for the PC manufacturer.

4. Kraft – From A-1 steak sauce, their signature mayonnaise and Oreo cookies to Oscar Meyer hot dogs, Planters peanuts and Wheat Thins crackers, this company ranks as one of the largest and best known food concerns in the world. Not surprisingly, it also does a brisk business with the Pentagon which has grown ever larger during the last decade. Back in 2001, Kraft inked $148 million in deals with the Department of Defense, by 2010, its yearly take had risen to $373 million.

5. Pepsi – Once upon a time it was the “choice of a new generation.” These days, it’s the choice of the Pentagon. In 2010, PepsiCo washed down $217 million in Defense Department contract dollars, compared to the mere $61 million in deals it inked back in 2001. Earlier this year, the company continued the trend by signing a multi-million dollar deal to provide the Army, Navy, Air Force and Marine Corps with “bag-in-box beverages.” (That very same day, Coca-Cola also received a slightly larger contract to provide drinks for the military.)

Other big-name firms that are regularly awarded large, lucrative deals from the Defense Department include tire titans Goodrich and Goodyear, oil giants Shell and Exxon Mobil, big food suppliers like Nestle, General Mills, Tyson, ConAgra and Campbell's Soup, and tech and telecom stalwarts including AT&T, Oracle, Sony and Verizon.

A decade of waging wars abroad, from Iraq and Afghanistan to Pakistan and Libya to Yemen and Somalia hasn’t been kind to average Americans. As the United States poured nearly $8 trillion into national security spending, and the national debt ballooned from $6 trillion to $14.3 trillion, the official unemployment rate has more than doubled -- from 4.5% to 9.1%. Meanwhile the number of children living in poverty in the U.S. has jumped nearly 20% since 2000, according to the National Center for Children in Poverty. And for older Americans, the risk of hunger has spiked almost 80% since 2001, according to a recent report by AARP. But from car companies to candy makers and even the biggest brands in organic food, so many of the world’s favorite companies have, over these years, cashed in on America’s wars.

In his famous 1961 farewell address, President Dwight Eisenhower warned of the "acquisition of unwarranted influence" by what he called the "military-industrial complex.” Today, however, the "large arms industry" that Eisenhower warned about is only part of the equation. Civilian firms such as FedEx and PepsiCo form the backbone of what more accurately can be described as a military-corporate complex of “civilian” businesses that enable the Pentagon to function, to make war and to carry out foreign occupations.

Almost a decade after Eisenhower's farewell address, there were still only about 22,000 prime contractors doing business with the Department of Defense. Last year, according to U.S. government records, the number stood at almost 135,000. The reasons why are simple. Big war budgets and ever-increasing national security spending have made the Pentagon’s deep, taxpayer-filled pockets especially attractive as a stable source of income in economically uncertain times.

Most Americans will never buy anything directly from Lockheed Martin, Boeing or Northrop Grumman, but many have spent money on Crest toothpaste (Procter & Gamble), Cheerios (General Mills), a PlayStation 3 (Sony) or paid for cell phone service from AT&T or Verizon – all of them big-time defense contractors. These and other large corporations have done very well, reaping rewards not only from Americans at the checkout counter but from their tax dollars by way of the Pentagon. Meanwhile, halfway across the planet, large numbers of Afghans and Iraqis -- who have seen their lives upended, their homes destroyed, and their family members killed and wounded -- have suffered as a direct result of the efforts of these and other members of the military-corporate complex.

Even with the specter of only modest growth (or even cuts) in defense spending on the horizon, the number of companies seeking the stability of a Pentagon paycheck is likely only to rise. And with it, the U.S. civilian economy is sure to become further militarized by stealth corporations cashing in on a state of permanent war, while the American public remains largely oblivious to their role in the military-corporate complex and America’s war-making overseas.